Bauer v. Rbx Industries, Inc., 02-4327.

• Decision Date: 17 May 2004
• Docket Number: No. 02-4327.,02-4327.
• Citation: 368 F.3d 569
• Parties: Carl BAUER et al., Plaintiffs, Craig M. Bennett et al., Plaintiffs-Appellants, v. RBX INDUSTRIES, INC. et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

368 F.3d 569

Carl BAUER et al., Plaintiffs, Craig M. Bennett et al., Plaintiffs-Appellants, v. RBX INDUSTRIES, INC. et al., Defendants-Appellees.

No. 02-4327.

United States Court of Appeals, Sixth Circuit.

Argued: March 12, 2004.

Decided and Filed: May 17, 2004.

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John L. Wolfe (argued and briefed), 1 Cascade Plaza, Akron, OH, for Plaintiff-Appellant.

Clair E. Dickinson (briefed), Brouse McDowell, Akron, OH, David F. Dabis (argued and briefed), Jonathan P. Harmon (briefed), McGuire Woods LLP, for Richmond, VA, Melvin P. Stein (argued and briefed), United Steelworkers of America, for Pittsburgh, PA, for Defendant-Appellee.

Before: NELSON, MOORE, and FRIEDMAN, Circuit Judges.^*

OPINION

MOORE, Circuit Judge.

The contentious relationship between a corporation and a group of its former employees following the closing of a manufacturing facility in Barberton, Ohio is the milieu for this appeal. At issue is a significant question of whether federal courts have the ability to hear claims filed pursuant to § 301 of the Labor-Management Relations Act ("LMRA"), 29 U.S.C. § 185(a), and pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132, when an accord reached between the corporation and the employees' union terminates a previously negotiated Collective Bargaining Agreement ("CBA"), the breach of which provided the factual basis for both claims. Additionally, we must evaluate the scope of the "right to sue" provision of the Labor Management Reporting and Disclosure Act ("LMRDA"), 29 U.S.C. § 411, to determine whether a viable LMRDA claim has been alleged.

Plaintiffs-Appellants ("Plaintiffs") were a group of former employees¹ at the Barberton, Ohio mixing facility owned by Midwest Rubber Custom Mixing Corp. ("Midwest"), which in turn was controlled by RBX Industries, Inc. ("RBX"). Following the closure of the Barberton facility, the Plaintiffs' national union, the United Steel Workers of America, AFL-CIO ("USWA"), and RBX signed a Settlement agreement (the "Settlement") in April 2002, which abrogated the previously negotiated CBA and purported to resolve all disputes between RBX and its former employees. The Plaintiffs filed an action against RBX, the USWA, and the employees' local union, Local Union # 77L, United Steel Workers of America ("Local 77L")², alleging a "hybrid" § 301 breach of contract/breach of duty of fair representation claim under the LMRA, 29 U.S.C. § 185(a), and various claims relating to the denial of benefits under ERISA. 29 U.S.C. § 1132.

The district court granted RBX's and the Unions' motions for summary judgment and denied Plaintiffs' motion to amend their complaint to include a claim under the LMRDA, 29 U.S.C. § 411. On appeal, the Plaintiffs argue that because the district court did not have jurisdiction over their § 301 hybrid claim, it erred in reaching the merits of the § 301 and ERISA claims, as it should have dismissed the action without prejudice. The Plaintiffs also argue that the district court erred in denying their motion to add the LMRDA claim. We agree that the district court lacked jurisdiction over the Plaintiffs' § 301 and ERISA claims, and consequently we VACATE the judgment of the district court and REMAND with instructions that the district court dismiss the Plaintiffs' action without prejudice. We AFFIRM the district court's denial of the Plaintiffs' motion to amend the complaint to add an LMRDA claim.

I. BACKGROUND FACTS AND PROCEDURE

A. The 1997 CBA

The effects of the Settlement can not be fully understood without explaining the 1997 CBA, which the Settlement superseded. The 1997 CBA was the latest in a series of pacts negotiated between Midwest and Local 77L, and it tied in several previously negotiated benefit plans. Two of these plans are pertinent³: the Midwest Rubber Supplemental Unemployment Benefits Plan ("SUB Plan") and the Midwest Rubber Custom Mixing Corp. Union Hourly Employees Medical and Life Insurance Plan ("Medical Plan"), the latter of which is also referred to as the "Agreement on Welfare Benefits Programs." With regard to the Medical Plan, the 1997 CBA stated, "It is recognized by the parties hereto that the provisions as outlined in Section 1 Paragraph (a) of [the CBA] may be applied to and shall include the [Pension Plan] and the Agreement on Welfare Benefits Programs...." Joint Appendix ("J.A.") at 1022 (art. XV, § 2(a)). Additionally, the 1997 CBA explicitly incorporated the SUB Plan. J.A. at 1022 (art XV, § 2(b)) ("It is recognized by the parties hereto that the separate Agreement on [SUBs] ... is a part of this Agreement."). Either Midwest, a committee appointed by Midwest, or RBX, as Midwest's successor, administered all three plans and possessed discretionary authority to determine eligibility, disburse benefits, and manage disputes.

1. The SUB Plan

The SUB Plan gave the Barberton employees "certain Benefits in the event of their layoff," J.A. at 284 (art. I), which were "intended to supplement any State System Benefits," J.A. at 284, rather than replace them. The SUB Plan provided for the disbursement of benefits and separation payments at amounts commensurate with seniority. A general trust fund served as the Plan's only financial source. Midwest was required to pay a certain amount into the fund each month, but Midwest's contribution could be offset or reduced by the costs of providing medical benefits for laid-off employees.

A Midwest employee at Barberton earned SUBs based upon several factors. An employee accrued "credit units" for each work week completed. The amount of the employee's SUBs consequently depended on seniority, whether that employee had used his or her credit units for prior benefits, and the status of the "fund position." The SUB fund position was determined by dividing the current market value of the fund's assets by a number proportional to the number of covered employees. Credit units were canceled if the fund position fell below a certain level. For example, if the fund position fell below 80%, credit units were canceled in a manner that rewarded seniority. If the fund position fell below 4%, no SUBs were payable. The fund position also determined the payment of separation payments: separation payments would be distributed only if the fund position equaled or exceeded 80%. If the fund position fell below 80%, the separation payments would be deferred until the fund position exceeded 80%. The SUB Plan explicitly stated that employees did not have any rights or vested interests in the assets of the fund. J.A. at 322 (art. IX, § 5). Furthermore, the SUB Plan's existence was tied to the CBA's: "Upon the termination of the [CBA], [Midwest] shall have the right to continue the Plan in effect and to modify, amend, suspend, or terminate the Plan, except as may be otherwise provided in any subsequent [CBA]...." J.A. at 326 (art. X, § 4(a)) (emphasis added).

2. The Medical Plan

The Medical Plan gave employees medical benefits and life insurance both during employment and in the event of a layoff. Following termination of employment, an employee would continue to receive medical benefits "for a period of 90 days beginning with the first day of layoff." J.A. at 217 (art. IV, § K.1(a)). An employee would also be covered for an additional time period beyond the first ninety days, which varied as a function of the number of SUBs an employee would expect to receive given an employee's available credit units on the last day worked prior to the layoff. For example, if an employee were entitled to thirty-three weeks of SUBs, as determined by the employee's seniority and the SUB Plan's fund position, the employee would receive ninety days plus five months of full medical coverage. See J.A. at 218 (art. IV, § K.1(b), (c)). If the SUB fund position dropped below 4% at the time of layoff, the employee would not be entitled to any SUB benefits, which consequently would limit the employee's post-layoff medical coverage to ninety days. Furthermore, if the SUB Plan were terminated, a laid-off employee would only be entitled to ninety days of medical care following the date of termination.

B. RBX's Bankruptcy Proceedings

RBX entered bankruptcy proceedings in December 2000 after one of its creditors filed an involuntary Chapter 11 bankruptcy petition against it.⁴ On June 29, 2001, RBX filed a motion seeking authority to close the Barberton plant and to transfer all operations to another RBX-owned plant in Tallapoosa, Georgia in the hopes that consolidating RBX's mixing operations into one location would maximize RBX's profits from that sector. As required by the bankruptcy court, RBX sent a letter dated June 29, 2001, to the USWA and Rose Jones ("Jones"), who was the USWA representative serving Local 77L, explaining that RBX would be closing the Barberton facility subject to the approval of the bankruptcy court. It emphasized that "the Midwest operation has been losing money for two years and, at current sales levels, our employees could work at minimum wages and no benefits and the Midwest operation would still fail to reach profitability levels competitive with our other locations." J.A. at 331 (RBX Letter 06/29/01). On July 12, 2001, the bankruptcy court granted RBX's motion to discontinue operations at Barberton.

C. The Closing of the Barberton Plant

After learning of RBX's intentions, Local 77L met with representatives of the government of the City of Barberton in early August to explore ways of forestalling the plant's closure. This meeting was not fruitful because no one from RBX attended the meeting. Quickly recognizing that the plant closure was a fait accompli, the parties entered into "effects" negotiations.

1. Negotiations Between RBX and the Unions

a. The First Proposal

On August 14, 2001, Jones, acting as the USWA representative, and several Local 77L officers met with RBX's attorneys, led by William Twomey ("Twomey") in what became a contentious meeting....